It’s quite possible that after reading Chapter 1 you have come to the conclusion that it is simply impossible for you to be a financial success on your own. Maybe you sense that the headwinds are too strong. America has changed and not for the good, you think. Opportunity is a thing of the past in this country. The great American dream might have been attainable for a previous generation, but not today. I disagree. I believe success is still possible for those who are persistent, pay attention to the details, and take advantage of the opportunities that come their way or make their own. Truth is, today’s economy requires a different mind-set to be successful. You’ll have to beat the Washington bureaucrats at their own game, to be sure, but you’ll also have to curb your worst impulses and take the long view. You’ll need to be more focused and open to new solutions to old problems.

I’m going to start by rebuilding your confidence in the system so that you can see your way forward to becoming a financial success. I think this is an essential first step for many of us. Then we’ll take a clear-eyed view of where you stand right now. If you want to build wealth and become a financial success, you’ll need to analyze your current situation and make sure you are ready for the biggest financial challenges you are likely to face. I’ll help you start the journey toward getting your finances in hand and on track.

First things first. Let’s take on the confidence issue. Central to the American way of life, I believe, is the idea that you own your successes. As a nation, we believe that individuals author their own accomplishments, and it’s this idea that fuels so much economic energy and so many powerful new ideas. You own it, and you benefit from your own labor. That’s why when the president commented, “If you’ve got a business, you didn’t build that. Somebody else made that happen,” so many of us were deeply offended. His viewpoint is strange to the ears of most Americans.

The truth is that Americans of many stripes are creating their own successes every day and benefiting from them. The benefits of innovations in social media and mobile apps are flowing to coders who sidestepped college to make their fortunes early. The fracking revolution, which has done what no Congress could do by boosting our energy independence and upending energy markets, was led largely by small entrepreneurs who often took advantage of mineral rights their families had held for decades. ExxonMobil didn’t lead this renaissance, and neither did K Street, and the benefits are pouring directly into the pockets of families all over the country. Every day, Americans are making it on their own and putting together their own financial future through the fruits of their own labor as plumbers, car salespersons, alpaca farmers, and every manner of vocation.

It’s simply not true that only the top 1 percent of Americans are getting ahead these days. The centerpiece of the Left’s economic agenda has been that the gains of the top 1 percent have come at the expense of the vast majority of Americans, and we have pretty much swallowed this idea whole. The idea is so pervasive that many of us, when polled, assert we are lower middle class. But the numbers show that this country is still producing wealthy individuals in large numbers. And by that I don’t mean billionaires. I mean solid high-net-worth upper-middle-class families that continue to find success and establish a future for themselves. In a single year, 2014, our economy minted 496,945 new millionaires, a 9.5 percent gain over 2014 and a better rate of growth of high-net-worth families than China, Brazil, the United Kingdom, or Russia, according to data from WealthInsight. This explosion in millionaires brought the total number of wealthy individuals in this country to 5.2 million. That’s five times the number of millionaires in China, which has four times the population of the United States. The United States can claim 32 times the number of millionaires in Russia. Even during the president’s first term of office, 1.1 million Americans joined the $1 million club, and by 2017 the nation will boast nearly 17 million households with a net worth of $1 million. Fidelity Investments, the huge retirement account administrator, tracked 1,100 individuals whose 401(k) plans were worth $1 million or more over a dozen years. The average salary for the members of this group, who were at the peak of their earning years at an average age of 59, was no more than $150,000 a year, a tidy sum but certainly not enough to earn membership in the 1 percent club.

By now I hope you’re feeling a little more upbeat about your potential and considering taking the reins of your future. You can be a financial success. Other people are succeeding, and you can as well. One of the tricks of getting there is managing your finances well over time. The folks in the Fidelity survey had some fascinating habits in common. First off, they started saving early, often in their twenties. Accumulating savings early gives investors that much more time to grow their money. Remember, the first $100,000 is the hardest to save and takes the longest to accumulate. At that level, gains can be seen and holders start getting the sense that they are making progress. The earlier you can hit this tipping point, the better. Because of an early start, these people were able to drive their balances to $400,000 by their late forties. This group also wasn’t shy about investing in stocks, putting 70 percent of their portfolios in equities. Another key to success is that the members of this group saved a median of 14 percent of their pay annually, or $13,300 a year, not including company matches. With the employer match, the investors’ total set-aside was 19 percent of pay! It’s hard not to be successful at that level. Thus first you have to have the foresight and the determination to get started, and then you have to manage your money well over time.

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Now that you understand the lay of the land, let’s evaluate where you are. Let’s take off the rose-colored glasses most of us wear and take a look at the most important measures of financial success. Are you on track to retire? By that I don’t just mean that you are making regular contributions to a retirement account. The story for most of us is that we are severely underprepared. Financial journalists cheered when Fidelity announced that the average 401(k) balances among its clients hit $91,300 at the end of 2014, a 30 percent jump from 2011. But that level wouldn’t sustain an average household for three years in retirement. In short, you’re going to need more.

I understand that you’ll be contributing different amounts depending on your age. When it comes to retirement savings, the typical trajectory for 401(k) contributions is small at the beginning and larger at the end as you earn more money. Early in your career, the absolute dollars you set aside may seem small, but this is the critical foundation on which your savings will be built. Fidelity offers a useful rule of thumb. By age 36, for example, you should have saved one times your current salary; by age 45, three times your salary; and by age 55 five times your salary. Are your savings even close to that? These numbers may seem impossibly high, but consider that you’re more likely to experience periods of unemployment in today’s job market. The Great Recession taught us that layoffs are a reality of today’s job market. Plus, you’ll be saving for what may be a retirement that is decades longer than your parents’ as longevity rises. And don’t forget that healthcare costs are on a constant march higher. For more details on saving successfully for retirement, check out Chapter 6.

The biggest obstacle to hitting your goals is not setting aside enough to begin with. You must resist the temptation to cash out your retirement in the early years. More than half of workers in their twenties who have 401(k) plans do just that. They cash out their holdings when they change jobs, partly because their balances are relatively low, according to benefits consultant Aon Hewitt. Only about a third of those who change jobs in their fifties do this. Taking the money and running, even when you have only a little set aside, is a mistake because you’ll have to start your savings all over again and will miss out on the gains you would have made had you stayed in the market. My advice is that even in your twenties you should pretend that your retirement money has been spent and is not accessible. Remember, if you’ve tapped your retirement dollars at any point in your savings history, you are behind. Even if you paid that money back, which you are required to do if you borrow from your 401(k), you had less time to allow that money to grow.

That’s the problem for many of us. We are playing catch-up. We haven’t been funding a 401(k) for our entire working lives, we’ve borrowed from it, or we’ve put in a paltry sum. For that reason, I believe many of us may have to set aside savings in a 401(k) plus open a second account, such as a Roth IRA, to make sure we have the funds we need at retirement. Set aside 12 to 15 percent of your income at a minimum if you want to be financially independent.

The next item on our checklist is backup. You need to make sure that if something bad happens, you are prepared. Do you have a six-month emergency savings account? That’s a full half year in earnings that you need to set aside in a fund you can access quickly. This saves you from bankruptcy if you unexpectedly lose your job or face medical problems. A garden-variety home repair has the potential to send the average household into financial disarray if that family doesn’t have savings. I remember well how handy our savings account was when a massive red oak fell in our yard. Our insurer would not pay for disposing of the tree, which turned out to be a $14,000 job. Sure, we could have tapped our retirement fund or taken out a home equity line of credit, but we had savings, and that allowed us to take care of the problem with no interest costs or penalties. Having an emergency fund is also a great way to assert financial control. If you know that you have insurance, you’ll be less likely to stay in a job that is a poor fit. Money means command over your life, and that is a confidence builder.

The other big financial goal for most families is paying for their children’s college education. Parents often wonder whether they have enough savings set aside for their children’s education, and it’s no wonder why. Costs for education have escalated faster than inflation for decades. (See Chapter 3 for more detailed information on college education.) In this chapter I will help you evaluate your savings to see if you are on track. Consider this: If you are saving $32.57 a week, or $130.28 a month, it will take 17 years to save $50,000 if you earn 6 percent on your money. It will take savings of $54.76 a week, or $219.04 a month, if you have just 12 years to earn $50,000 at the same rate of return. It will take $93.71 a week, or $374.84 a month, to save $50,000 at a 6 percent rate of interest if you wait until you have just eight years to save. And if you have only four years to save $50,000, you’ll need to set aside $212.83 a week, or $851.32 a month. Let’s face it, it’s not likely that $50,000 is going to cover the entire college education tab. Remember, it’s not the cost of today’s education that matters here (exorbitant though it may be) but the price tag your children will encounter when they start their first day as a freshman, after 5, 10, or 15 years of college inflation. The point is that the longer you wait, the more you will need. If you are smart enough to start when your child is born, $300 a month will get you close to paying for a state-school education. (You’ll need more if you send them to a private school or an out-of-state public university.)

One critical warning for parents: as you consider your college savings balances, be careful not to give all your money to your kids. Financial advisers tell me they are astonished at how much money moms and dads are giving their grown children. After all, your kids can borrow for their education. You can’t borrow your retirement dollars.

If you remember anything from this chapter, it should be this: becoming financially successful is a goal worth achieving, and it can still happen in this great country. It can happen to you if you work and strive toward it with a goal firmly in mind. But it takes planning and hard work. What you find, though, as you watch people who are successfully moving toward this goal is that they have a handful of positive characteristics in common. They know the value of money and are loath to waste it. They make their own luck, and they aren’t flummoxed by failure; in fact, they see it as inevitable and a good teacher. They don’t compare themselves with the neighbors but set their own standards.

What’s more, the United States is the best place on this planet to get ahead on one’s own. We have faced adversity multiple times and come back. After all, only 15 years ago we experienced the worst attack on our shores since Pearl Harbor when Osama bin Laden attacked the World Trade Center Towers and the Pentagon, killing 3,000 Americans on September 11, 2001. President George W. Bush went to the World Trade Center site, clambered on the rubble, and swore our enemies would hear from us. And they did. Weeks later, we were fighting bin Laden in the frozen mountains of Afghanistan. And though the attack occurred in New York City, the center of our nation’s economic activity, Wall Street did not fall. It repaired itself, and now trading occurs on electronic platforms all over the country. No one attack could stop our markets today. The point is that America has a core of toughness and resilience to call upon. And so, by extension, do you.